The widely expected move likely sets the stage for an eventual plea agreement, legal observers said, after Wasendorf confessed last month to bilking his customers out of millions of dollars.

Wasendorf, 64, was indicted on Monday on 31 counts of overstating the amount of customer funds at his brokerage by tens of millions of dollars in faked monthly and yearly reports to the Commodity Futures Trading Commission (CFTC).

Peregrine filed for bankruptcy protection on July 10, one day after Wasendorf attempted suicide and left a note describing how he had stolen from customers for nearly 20 years.

The collapse of what was once a mid-sized futures brokerage has dealt a further blow to confidence in the futures industry, coming less than a year after MF Global Holdings Ltd's bankruptcy, which left customers with a $1.6 billion shortfall.

In his first appearance since the indictment, Wasendorf on Friday shuffled into a small courtroom at the U.S. District Court in the Northern District of Iowa in Cedar Rapids, clad in an orange prison jumpsuit and tan sandals, with his hands and feet shackled.

"At this time he pleads not guilty on each count," his public defender, Jane Kelly, told Magistrate Judge Jon Scoles.

FACES UP TO 155 YEARS IN JAIL

Futures brokerages are required to submit financial data on a monthly basis to the CFTC, and the reports are then published on the regulator's website.

The CFTC has said Wasendorf misappropriated more than $200 million in customer funds.

If convicted on all charges, Wasendorf faces up to 155 years in jail, a $7.75 million fine and 93 years of supervised release following any imprisonment, according to the U.S. Attorney's Office.

Wasendorf has been held in an Iowa county jail since being arrested July 13 at a hospital, where he was being treated after attempting to kill himself.

Wasendorf said in his confession that, using little more than a post office box, laser printers and Photoshop software, he forged and intercepted financial statements that were mailed between U.S. Bank, where some Peregrine customer money was held, and the firm's auditors at the National Futures Association.

He also said he spent most of the stolen money trying to keep his brokerage afloat.

POTENTIAL PLEA DEAL

Wasendorf was expected to plead not guilty because it allows his lawyer time to examine the evidence that may be used against him in a trial.

Kelly, his public defender, may feel she can negotiate a more favorable plea agreement if she sees the government's evidence, legal observers said.

Kelly and prosecutors left the court without commenting.

Even if the government's case is air-tight, prosecutors will likely be open to negotiating a deal because Wasendorf may be able to help locate some of the stolen money, said Richard Holwell, a former federal judge in the Southern District of New York who is now a partner at Holwell Shuster & Goldberg LLP in New York.

"Even in a case where the defendant is guilty, guilty, guilty, there usually is some negotiation, if only over the institution where the defendant would serve his or her time," said Holwell, who is not involved in the Wasendorf case.

Still, it will be difficult for Wasendorf to negotiate a favorable deal, given that he spelled out his crimes in a lengthy signed confession, lawyers said.

"When you make a detailed statement, you're not only confessing that you did something wrong; you're also giving them a roadmap on how to corroborate it," said Kevin O'Brien, a former assistant U.S. attorney for the Eastern District of New York who is now a partner at the law firm Harris, O'Brien, St. Laurent & Houghteling.